Making Tax Digital: changes to UK VAT compliance

This blog post was written by Marc Verbeek.

Marc Verbeek is a Tax Partner currently working for Crowe Horwath Vanhuynegem Associates in Belgium, prior to this he worked at the Belgian Ministry of Finance, before moving on to spend 26 years with BDO. Marc is a certified tax consultant. His expertise includes (international) corporate tax advice, international employment tax, corporate tax compliance, rulings and litigation.

One of the biggest changes to the way UK companies interact with HMRC, the UK tax authority, is coming into effect from 1 April 2019. Making Tax Digital (MTD) is HMRC’s initiative to bring technology and tax together, allowing HMRC to become a “world leading, digital tax authority.”

What does it mean?
The changes will mean that all UK VAT registered organisations with a turnover above the UK VAT registration threshold (£85.000) will have to:
• keep, and be able to provide, their UK VAT records digitally.
• submit their UK VAT data to HMRC through compatible software, not through the HMRC online portal.
HMRC will no longer allow UK VAT return figures to be manually entered in the HMRC online portal when submitting the UK VAT return. Instead, you will need to have software capable of doing this for you.

Will I be affected?
Any business registered for UK VAT as their turnover has exceeded the UK VAT registration threshold will be affected. Of those, some already have a digital mechanism to transpose the figures from the UK VAT return workings to a submission, however the majority do not. According to figures from the Chartered Institute of Taxation, the leading professional body in the UK for tax advisers, 87% of UK VAT taxable persons will have to take action as a result of the new rules. The only exemptions will be for religious reasons or in the event of insolvency procedures.

What about international businesses?
Of particular interest to Belgian businesses will be that almost everyone who is UK VAT registered will have to comply with the MTD rules; being established overseas or submitting UK VAT returns outside of the UK will not result in an exemption from MTD requirements.
In addition, it may be a greater challenge to overseas organisations to comply with MTD for UK VAT as their UK activities are likely to be a single part of a larger international activity. This could also be the case for UK organisations who are part of international groups required by their overseas head offices to operate specific accounting or reporting processes and software.
As a result, if your organisation is currently manually entering the UK VAT return figures on HMRC’s portal, MTD will present a significant change to your current UK VAT processes.

What are the main requirements?
HMRC’s intention is that software will be used to maintain the relevant digital records, calculate the UK VAT return figures and to submit the return electronically. This is to be done using functional compatible software.
This software should also act as a digital ‘bridge’ between the UK taxpayer and HMRC’s systems. It will no longer be acceptable for an organisation to manually transpose figures when submitting their UK VAT returns.

When does this take effect?
HMRC has indicated there will be a “soft landing” period between April 2019 and April 2020 without application of financial penalties for record-keeping failures. This is to assist organisations by allowing extra time to update their systems to be fully compliant. There will however, have to be a digital link from the outset between the spreadsheet and the linking software that submits the UK VAT return digitally.
MTD as it currently stands is likely to just be the start of the road; it is intended to be introduced for UK Income Taxes in April 2020 and it is not unreasonable to expect that the scope of what information and data is available electronically for HMRC to access remotely will only get broader. As a result, even with a soft landing period, companies need to proactively take steps to ensure they remain compliant.

What software should I use?
HMRC has stated that it will not be providing software for organisations to use, and currently they have not yet informed taxpayers as to commercial software suppliers who will be providing the “functional compatible software”. Commercial software providers are developing solutions and some organisations will have sufficient in-house IT capability to build their own.
“Functional compatible software” is a software program or set of compatible software programs that must be able to:
• record and preserve electronic records in an electronic form for up to six years
• create a UK VAT return from the digital records
• provide to HMRC information and returns from the electronic records in an electronic form and by using an Application Programme Interface (API) to link to HMRC’s systems
• receive information from HMRC.
There “must be a digital link” between all software used by the organisation for its UK VAT compliance. Examples are given in HMRC’s guidance and a very common one, likely to be familiar to a large number of organisations, is the situation where to prepare the UK VAT return the taxpayer:
– maintains its sales and purchases data in an accounting system
– downloads this data into a spreadsheet for manual manipulation
– manually enters the figures into HMRC’s website for submission.
Under the new rules, the links between the two software programs (accounting system and spreadsheet software) must be digital.

What now?
Although the implementation date is in 2019, like all technology projects, there is a lead time in making the necessary changes to be able to successfully implement the measures needed to comply with the new rules.

Organisations affected by MTD need to consider a strategy for the immediate requirements to be ready for the April 2019 launch date and also give thought as to whether these preparations should include a readiness for a likely future expansion of the MTD requirements, be it for additional UK VAT data or for other UK taxes such as Income Tax.

Understanding the burnout experience

Written by Sarah Crew, editor of the Bulletin and guest contributor to the blog.

It is something of a contradiction. Work is central to our lives and identity, but it can also be the source of serious ill health. With more and more people being declared unfit to work due to stress, anxiety and depression, the need to address good mental health practices is becoming urgent.

While burnout can be difficult to define and diagnose, it is widely accepted as being chronic stress resulting in physical and mental exhaustion and breakdown, often accompanied by alienation from workplace activities and reduced performance. The expatriate population is not immune, and expats are often vulnerable due to the stress of adapting to another country, the lack of family and social networks, and by frequently working in a high-pressure environment.

As editor of The Bulletin magazine and other publications, I have had the opportunity to write about workplace stress. The reason I tackle this topic is that my own life has been transformed by my adult son’s mental health condition. Juggling full-time work with my role as a carer means I have no choice but to look after myself. Support networks are invaluable, while psychosocial training and a mindfulness course have taught me coping strategies that extend to work as well as home.

Raising awareness of mental health issues and attempting to combat the stigma surrounding them is a rewarding experience: seeking the positive in what is otherwise a deeply sad experience. I joined the Brussels-based NGO Mental Health Europe (MHE) to learn about good practices around the continent. It’s the leading organisation in Europe advocating for the rights of people living with mental ill health and promotes the economic and social case for good mental health in the workplace.

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 Image from MHE Mental Health Infographic

 

Its research from the EU-OSHA survey shows that work-related stress is the second most reported work-related health problem and has become one of the leading causes for absenteeism and early retirement in the EU. It reports that 79% of managers in Europe are concerned about stress in their workplace, but less than 30% of workplaces have procedures in place to tackle it.

Employees in the EU highlighted numerous factors that cause stress, including unmanageable workloads, unrealistic expectations, ambiguity about their role, low job satisfaction and personal accomplishment, lack of recognition, an unhealthy work-life balance and workplace harassment.

MHE’s campaign promotes positive health by encouraging bosses to champion positive mental health, creating a culture of openness that stops mental health being a taboo subject. It focuses on managers’ attitudes as the most important factor in ensuring a positive workplace that respects the individual, encourages feelings of fairness and a work-life balance, and pays attention to interpersonal relationships.

Communications manager Ophélie Martin points to the evidence that inexpensive mental health programmes in the workplace are cost-effective. “Mental health at work should be addressed through a public health perspective: positive mental health will benefit employees, employers and society as a whole,” she says.

Brussels mental health service and helpline Community Help Service (CHS) is well-known within the international community. One of its clinical psychologists, Nicole Josephson, says young, ambitious expat professionals are classic burnout victims. “They put everything into their work, and as they come from another country they don’t yet have a social circle, which makes it harder to keep that all-important work-life balance.”

She says it’s more socially acceptable to admit to burnout than having a nervous breakdown or depression. “Personality factors include being anxious, which tends to make you more perfectionist, hard-working and ambitious,” she explains. “Having difficulty expressing your discomfort and liking being in control predispose you to overwork, leading to your whole world becoming skewed as all your energy goes into one place. If work is problematic and you cannot find satisfaction in another area or another relationship to help counterbalance this, all you are getting is reinforcement of your work identity.”

Burnout was initially diagnosed in the health and social service sector, but is now experienced in nearly all jobs and levels of responsibility, usually when there is a lack of sense of control. “It helps when you feel you can make decisions for yourself,” Josephson says. She believes managers are more susceptible when they have to report to someone else or if they have difficulty managing their team. “I’ve seen a lot of people burn out if their authority is disregarded, if they don’t feel they can move their staff in the right direction,” she says.

In more severe cases, recovering from burnout can be lengthy. “Some people can get over it quite quickly, but others may need at least a year, especially if they have ignored their own internal messages that things are going wrong. Recovery may be devastating and in a psychological sense is almost like learning to walk again.”

While Josephson thinks Belgium has been slow to recognise the importance of supporting people in the workplace, “reflecting the national bias not to talk about problems”, she has noticed a changing attitude. “It’s maybe a swinging of the pendulum, but we are seeing more people in Belgium taking parental leave and working shorter hours. Millennials in particular are questioning the work ethic of the older generation and showing more of an interest in traditional values and going back to nature, so there is some optimism for the future,” she says.

My own experience is that it is definitely becoming more acceptable to talk about personal difficulties, which is the first step in counteracting what is generally a very isolating occurrence. If I have any advice it is the importance of developing self-awareness, looking kindly on colleagues and friends encountering problems, and not hesitating to seek support. I also have to confess that even if I know the theory, I still push the boundaries of my own work-life balance. The stress of deadlines can be quite addictive and I’m not alone in feeling that I perform best when working under pressure. So the inherent contradiction around work is definitely a question of balance and one that requires continual monitoring.

Classic warning signs

Feeling sad or depressed

Anger and irritability

Loss of sense of purpose

Low energy/exhaustion

Anxiety, particularly feelings of panic

Memory and concentration problems

Digestion problems

Social withdrawal

Loss of sex drive

Using alcohol or drugs to cope

 

Stress-busting tips

Take 30 minutes out every day

Try to live in the present

Switch off your phone at night and try not to reply to emails at all times

Don’t give up sports and hobbies

During moments of stress, stop and assess your mood

Spend time with family and friends

Seek help if alcohol or drug consumption increases

 

 

COBCOE Report

COBCOE recently released a new report titled “Review of European business views
on the Transition Period” which comprised of business input from businesses in the UK and across the EU. Some of the input came from our Brexit Ambition Roundtable February 2018 event held at the chamber. This report was shared with government official and is aimed to influence current negotiations between the UK and EU.

 

To view the full report click here.

Brussels Moves!

Brussels Moves!

Help shape the future of the city and have your say on transport, air pollution and voting rights for foreigners. Ahead of The Bulletin’s debate on 26 April, we’d like to hear your opinions on how to make our city a better place. Fill in our quick survey here.

The Bulletin invites you to the free event, followed by networking and a free drink.
When: Thursday 26 April, 19.00-21.30
Where: KBC Group, Avenue du Port 2, 1080 Brussels (metro Yser)
Book your place here now!

Reaction to European Council (Art. 50) guidelines on the framework for the future EU-UK relationship – 23rd March

 

The British Chamber welcomes the EU and UK transitional agreement allowing additional time for a deep and comprehensive future relationship agreement to be negotiated. We also, welcome the UK and EU’s joint intention to achieve a post-transition relationship that satisfies the mutual interests flourishing between them.

We ask:

• the European Council to deliver a negotiation mandate which enables the broadest and deepest possible relationship between the UK and EU to be agreed,

• the UK to present, without delay, its written proposals for a deep and comprehensive future relationship with the EU27 as soon as possible, and that this proposal contain sufficient details on how trade between the UK and EU in each business sector will function, so that EU and UK business have enough time to understand how it will need to adapt and minimise disruption to customers, supply-chains and the workforce.

Bake to Basics

The yearly charity baking competition organised by the Brussels New Generation, the young professionals group of the British Chamber, is back for a 6^th edition!

About the charity…

The event, like in the past years, will raise money for the Community Help Services (CHS), a Brussels-based non-profit organisation that provides a free 24/7 confidential English-speaking helpline.
Their work is extremely important for the expat and local community and they seriously need our help to continue the amazing work they’ve been doing so far. So this year more than ever we would like to raise as much as possible for CHS.

About the theme…

In the past years we have seen amazing cakes in all shapes and sizes, showing off the teams baking abilities as well as their creative talents.

After the sugar paste feast of the previous years, induced by our wacky themes and categories, we thought that coming back to the art of simple baking would be very welcomed by the audience as well as the jury.
Therefore, this year we are going back to baking basics, hence the tagline Bake to Basics (get it? Bake –Back, shout-out to our intern Luca for coming up with it).

And the categories for the 2018 edition are…

The teams will be sorted into categories on the 4^th of May live on the Brussels New Generation Facebook page.

About participating…

You can join in the fun in different ways:

1. Register a team of max.4 and get baking for a good cause. Click here for more information and team registration.
2. If you are not much of a baker you can join us as a taster on the evening of the 28^th of May  (tasters registration will open on the 7^th of May).
3. You can also become a CHS Donor, a Drink Sponsor, or Gift Donor. For more information on that feel free to contact Francesca@britishchamber.eu.

We look forward to seeing you there!

 

 

 

 

Women in Digital

 

Věra Jourová is the European Commissioner for Justice, Consumers and Gender Equality since 2014. She shares her message on gender equality in digital spaces today on International Women’s Day.

I am delighted to talk to you  today on International Women’s Day. This is a day to celebrate women’s achievements in many fields of life. For me, as EU Commissioner for Gender Equality, it is also a day to remember that we are far from equality between women and men.

One area where I’m sure you’ll agree there is still a large gender imbalance is in the digital field.

The digital opportunity

The sad reality is that women make up less than one in five ICT graduates in the EU, and this figure is only declining. Even our youngsters are not embracing opportunities. I find this depressing– it is not that women are incompetent or uninterested! On the contrary, we know that there are no major differences between the basic digital skills of young men and women.

We must ask ourselves what is shaping choices of girls from an early age? We found that only 16% of the almost 8 million people working in ICT are women. To make things worse, there is a high drop-out rate of women from digital jobs, which results in an annual productivity loss of around 16 billion euros in the EU.

However, for the women that do work in this sector, the digital sector is indeed a rather equal workplace. For example, research shows that, in the tech sector, men and women who share the same non-managerial jobs and similar backgrounds tend to earn the same. But, we must not forget that the hierarchical structures are still very much dominated by men, with women representing only a tiny portion of the tech industry’s top leadership.

All hands on board for gender equality

Empowering women in digital spaces goes hand in hand with gender equality and empowering women more broadly. With an average score of 66.2 out of 100 on the Gender Equality Index, the EU is still a long way off from reaching a gender-equal society. We need concrete actions and this is why, throughout my mandate, I have launched several initiatives which can bring real improvements.

A very important issue we are trying to tackle is equal access to economic resources. It is not just a matter of women’s economic independence. It is a prerequisite for the achievement of economic growth, prosperity and competitiveness. Progress has been slowing: in fact, the employment gap and pay gap have remained pretty similar in recent years. The persistence of these gaps led us to take action. We realised without action we would be stuck with progress at a snail’s pace!

In November 2017, we announced a concrete response to put an end to the gender pay gap through an Action Plan to be delivered until the end of this mandate, in 2019.

In April 2017, we announced the EU Social Pillar to give equal opportunities to men and women in the working place, specifically through the work-life balance proposal. With these new rules, we would be giving equal weighting to leave provisions for mothers and fathers alike. We want to offer people choice so they have opportunities to chase their dreams and arrange their lives how they see fit.

We are also working to improve the gender balance in companies at all management levels and encourage governments and social partners to adopt concrete measures to improve gender balance in decision-making.

And when it comes to digital, one of our top priorities is to tackle the lack of skilled ICT professionals. The Digital Skills and Jobs Coalition, launched in December 2017, brings together stakeholders who take action in order to tackle the digital skills gap in Europe. In one year, members of the Coalition have provided several million training courses on digital, both online and face to face, to Europeans and now they are running through 18 National Coalitions.

In 2017, we also launched the Digital Opportunity Traineeship. This is pilot project that will provide around 6,000 students with experience in cybersecurity, artificial intelligence, programming and big data in the period 2018-2020. This is of course is directed equally and women and men.

As you can see, many of the initiatives go beyond legislative action and they are a proof of the multi-stakeholder approach, which the EU has firmly embraced.

So, today, I call you, as company and business representatives, to action. You have a key role in helping people to upskill and foster their careers, by offering equal opportunities to men and women in the workplace.  Only with joint efforts will we make Digital a women’s world too. I am committed to defend equal rights and opportunities on the labour market for men and women and I am counting on your support!

 

I wish you all a Happy Women’s Day!